Emergency funds: Almost a year's expenses in money market in taxable. Not included in Asset Allocation.
Debt: None.
Tax Filing Status: Single
Tax Rate: Less than 28% Fed, 0% State
Income: Rental property income, small amount from inherited SPIA, RMD from Inherited IRA
State of Residence: NV
Age: 58
Desired Asset Allocation: 60% Stocks/40% Bonds.
Desired International Allocation: 30% of stocks
Current total portfolio: Low seven figures
Split of taxable to tax-advantaged: 25%/75%

Note: I own three properties outright (value approaching $1M), live in one, rent out others (one actively managed, one professionally managed).
I kept 457 and TIAA-CREF accounts separate for early-withdrawal and loan properties. Will decide later if want to transfer to Vanguard.
Some rounding error, portfolio totals 99.98%

Since I have big chunk of my assets in real estate, should Asset Allocation be closer to 50/50 or 40/60?

I don't know what to do with all of the funds in taxable except to draw down high-fee funds/REIT as needed for income and just pay tax at that time. Most have long-term gains. Continue to draw down until have one or two low-fee stock funds?

Fund placement concerns: I wasn't sure if I should put bond allocation or international stock allocation into variable annuities. Should Roth be all bond as well?

I called Vanguard and they suggested about 14% of bond funds (or 5.6% overall portfolio) in Vanguard Short Term Investment Grade Fund Admiral Shares and place in IRAs. Is the added complexity in the bond portion worth it? Isn't percentage to overall portfolio too small to make any difference?

My income is variable, based on vacation rental income being variable, don't have to draw from taxable, and if in 15% tax bracket at some point, should I start converting IRA to Roth? It's probably now or never. Can ramp up income after conversion if I want.

Thanks again for any feedback for improvement!

~ CurlyQ

Last edited by Curlyq on Thu Oct 05, 2017 10:01 am, edited 2 times in total.

Emergency funds: Almost a year's expenses in money market in taxable. Not included in Asset Allocation.
Debt: None.
Tax Filing Status: Single
Tax Rate: Less than 28% Fed, 0% State
Income: Rental property income, small amount from inherited SPIA, RMD from Inherited IRA
State of Residence: NV
Age: 58
Desired Asset Allocation: 60% Stocks/40% Bonds.
Desired International Allocation: 30% of stocks
Current total portfolio: Low seven figures
Split of taxable to tax-advantaged: 25%/75%

Note: I own three properties outright (value approaching $1M), live in one, rent out others (one actively managed, one professionally managed).
I kept 457 and TIAA-CREF accounts separate for early-withdrawal and loan properties. Will decide later if want to transfer to Vanguard.
Some rounding error, portfolio totals 99.98%

Since I have big chunk of my assets in real estate, should Asset Allocation be closer to 50/50 or 40/60?

That's a judgement call. Really depends on your level of risk tolerance. I think either is defensible. I'd probably stay 50/50 but is just my gut feeling FWIW.

I don't know what to do with all of the funds in taxable except to draw down high-fee funds/REIT as needed for income and just pay tax at that time. Most have long-term gains. Continue to draw down until have one or two low-fee stock funds?

Seems like a reasonable approach. A couple of those funds have been pretty good funds in spite of modest fees. I would not subject yourself to capital gains just to replace them with index funds. Also if your tax rate is low now it could be a better time to liquidate some. It really depends on whether your tax rate will go up or down. Or if we experience a market downturn it may make sense to liquidate some of them then.

Fund placement concerns: I wasn't sure if I should put bond allocation or international stock allocation into variable annuities. Should Roth be all bond as well?

Not sure what you are asking re annuities. Pretty much everybody here will recommend against these types of annuities. As to where to place bonds, it is a debated subject but most come down on the side that bonds are better in a tax advantaged account (traditional or Roth ) such that their income which would normally be taxed at regular income tax rates is instead tax deferred.

I called Vanguard and they suggested about 14% of bond funds (or 5.6% overall portfolio) in Vanguard Short Term Investment Grade Fund Admiral Shares and place in IRAs. Is the added complexity in the bond portion worth it? Isn't percentage to overall portfolio too small to make any difference?

Seems like a sound recommendation, not terribly complex and $60k or more is not "nuthin". But you are right it probably won't have a huge impact on your portfolio.

My income is variable, based on vacation rental income being variable, don't have to draw from taxable, and if in 15% tax bracket at some point, should I start converting IRA to Roth? It's probably now or never. Can ramp up income after conversion if I want.

Thanks again for any feedback for improvement!

~ CurlyQ

Yes if you find your income is lower in a particular year and you know you will have substantial taxable assets in retirement doing some Roth conversions could make a lot of sense. It is probably a good idea to try to forecast what your income may be in retirement to facilitate that decision. But from my perspective if you find yourself in the 15% bracket in the near future a conversion is probably a no brainer.

50/50 makes sense, given my age and not working as much anymore. Back to spreadsheet to adjust!

Again just my gut. You can make an argument that since 50% of your net worth is in risky real estate investments that a "safer" investment portfolio is in order. I'd do whatever makes you most comfortable. With $2 million+ in net worth you have ample savings and focusing more on capital preservation does make sense.

I'm stuck with the annuities (former Ameriprise advisor and 20 years working in education). Vanguard wanted to put Int'l Stock into annuities, I put in Total Stock. Not sure it matters?

Agree that it doesn't matter between total stock vs international stock. Since annuity income is taxed at regular rates (I think, hopefully somebody will correct me if wrong) it could make sense to have bonds in annuity. I'd rather have higher gaining equities in tax deferred/free accounts or taxable accounts.

Now that I looked again, Vanguard is suggesting four different bond funds. Even smaller percentages. I want one bond fund.

That should be fine.

I will watch income and decide Roth Conversion. I can afford to spend more than I am, so it's just a decision to make. It's really hard to spend after being chronic saver for decades.

Thanks very much!

CurlyQ

I'm personally a big fan of having diversity between traditional and Roth retirement vehicles. If you can convert at a rate close to or lower than your projected retirement tax rate seems like a win/win to me.

This puts me close to a 52/48 allocation with international stock around 21.5% of stock allocation (in that 20-30% Int'l ballpark) and keeps single funds in all other retirement accounts for simplicity. I can draw down stock allocation in taxable to get to 50/50 eventually, probably the REIT first as it's the highest fee. Figuring that out versus Roth Conversion is a separate analysis, but now I have an idea of what to do.